Editor’s Note: As the United States heads toward
a pivotal election on Nov. 7, both Republicans and Democrats are worried
about the prospect of an “October Surprise” that could alter the
political dynamic in the next two weeks.

Though last-minute campaign surprises are
probably as old as democracy itself, the phrase in its modern usage
dates back just over a quarter century to 1980 when President Jimmy
Carter was seeking the freedom of 52 American hostages in Iran.
Then-vice presidential candidate George H.W. Bush fretted publicly that
a hostage release might be an “October Surprise” that would catapult
Carter to reelection.

Ironically, however, the 1980 “October Surprise”
controversy came to refer to an alleged dirty trick by Bush and other
Republicans that thwarted Carter from gaining the hostages’ freedom.
Carter’s failure propelled Ronald Reagan and George Bush Sr. to a
landslide victory.

Arguably, the “October Surprise” of 1980 ushered
in the modern era of GOP dominance, with the 12 years of the Reagan-Bush
administrations. Arguably, too, the Democrats’ failure in December 1992
to get the truth out about the Republican chicanery set the stage for
the Right’s congressional resurgence in 1994 and for today’s George W.
Bush Era.

History
turned in December 1992 when the truth about what happened in the
pivotal 1980 presidential election might finally have been revealed to
the American people. Just a month after Bill Clinton defeated George H.W.
Bush, the dam that had held back the 12-year-old secrets finally gave
way.

An investigative House Task Force was putting the
finishing touches on a report intended to debunk the longstanding
October Surprise allegations of Republican interference with the Iranian
hostage crisis in 1980. The bipartisan Task Force planned to treat the
story as a conspiracy theory run wild.

But suddenly the Task Force found itself inundated
by a flood of new evidence going the other way, indicating that the
long-whispered suspicions of a grotesque Republican dirty trick a dozen
years earlier were true.

Task Force chief counsel Lawrence Barcella, who had
been onboard for the debunking, was stunned by the late surge of new
evidence. He concluded that it couldn’t be ignored and that it justified
extending the investigation at least a few more months.

Years later, Barcella told me that he recommended a
three-month extension to the Task Force chairman, Rep. Lee Hamilton, but
the Indiana Democrat rejected the idea of taking the extra time to check
out the new evidence. An extension would have required getting approval
from the new Congress being seated in 1993.

Plus, Hamilton, who was about to ascend to the
chairmanship of the House International Affairs Committee, had other
priorities. He treasured perhaps more than anything his reputation as a
respected centrist figure in a capital city torn by partisanship.

Hamilton, with his no-nonsense butch haircut and
home-spun eloquence, was a candidate for one of Washington’s highest
unofficial honors, the title of Wise Man. Indeed, Hamilton’s passion for
bipartisanship had made him the Democrat that the Republicans most
wanted to run an investigation into Republican wrongdoing.

When Hamilton was chosen in late 1991 to chair the
October Surprise Task Force, Republicans hailed his selection. Hamilton
then selected investigators who weren’t inclined to press too hard, even
as Hamilton’s GOP counterpart, Rep. Henry Hyde, staffed his side with
tough-minded partisans.

At one point, in a gesture of bipartisanship,
Hamilton even granted Republicans veto power over the choice of a
Democratic staff investigator. Hyde exercised this extraordinary offer
by blocking the appointment of House International Affairs Committee
chief counsel Spencer Oliver because Oliver suspected the October
Surprise allegations might just be true.

Debunking Bias

So, as the investigation proceeded in 1992, there
was a powerful inclination inside the Task Force to dismiss the
allegations that had dribbled out over the years, depicting a kind of a
prequel to the Iran-Contra scandal, which broke in 1986 with disclosures
of other secret arms-for-hostages deals between the Reagan
administration and Iran’s radical Islamic government.

Despite exposure of the lies that had surrounded
the Iran-Contra Affair, Hamilton’s Task Force didn’t want to believe
that George H.W. Bush and other Republicans had begun those contacts six
years earlier by undercutting President Jimmy Carter’s negotiations to
free 52 Americans held hostage in Iran in 1980.

By the early 1990s, the climate in Washington also
was extremely hostile to the 1980 October Surprise allegations. They had
been denounced by Republicans and attacked by influential journals, such
as the neoconservative New Republic. The very idea that then-President
Bush would have exploited the national humiliation of that earlier hostage
crisis for political gain was unthinkable to many Washington insiders.

Plus, in December 1992, after Clinton had defeated
George Bush Sr., the Democrats saw little reason to pursue divisive
allegations dating back a dozen years that also would tarnish the legacy
of the well-liked Ronald Reagan. It was feared, too, that exposing these
old crimes might engender more partisan bitterness and poison the
political climate as a new President, Bill Clinton, was taking office.

At that naïve moment – 14 years ago – Democrats
felt it made sense to bargain away a few seemingly unimportant
historical facts for a chance at better cooperation with Republicans on
domestic issues that Clinton held dear, like the budget and health care.

The House October Surprise Task Force, therefore,
turned a deaf ear and a blind eye to the late-arriving evidence that
tended to corroborate the October Surprise allegations, which had
emerged over the years from a variety of intelligence operatives and
foreign officials.

But in late 1992, the
newly arriving evidence left chief counsel Barcella not entirely
comfortable with a definitive conclusion rejecting the October Surprise
allegations. On Dec. 8, 1992, he instructed his deputies “to put some
language in, as a trap door” in case later disclosures disproved parts
of the report or if complaints arose about selective omission of
evidence.

“This report does not and
could not reflect every single lead that was investigated, every single
phone call that was made, every single contact that was established,”
Barcella suggested as “trap door” wording. “Similarly, the Task Force
did not resolve every single one of the scores of ‘curiosities,’
‘coincidences,’ sub-allegations or question marks that have been raised
over the years and become part of the October Surprise story.”

But some of the information that would arrive during the investigation’s
final month would deal not just with “curiosities,” but with central
questions behind the mystery of why the American hostages were
freed immediately after Reagan and Bush were
sworn in on Jan. 20, 1981.

Iranian Testimony

On Dec. 17, 1992, former
Iranian President Abolhassan Bani-Sadr sent a letter describing the
internal battles of the Iranian government over the Republican
intervention in the 1980 hostage crisis. Bani-Sadr recounted how he
threatened to expose the secret deal between Reagan-Bush campaign
officials and Islamic radicals close to Ayatollah Ruhollah Khomeini if
it weren’t stopped.

Bani-Sadr said he first
learned of the Republican “secret deal” with Iranian radicals in July
1980 after Reza Passendideh, a nephew of Ayatollah Khomeini, attended a
meeting with Iranian financier Cyrus Hashemi and Republican lawyer
Stanley Pottinger in Madrid on July 2, 1980.

Though Passendideh was
expected to return with a proposal from the Carter administration,
Bani-Sadr said Passendideh instead carried a plan “from the
Reagan camp.”

“Passendideh
told me that if I do not accept this proposal, they [the Republicans]
would make the same offer to my [radical Iranian] rivals. He further
said that they [the Republicans] have enormous influence in the CIA,”
Bani-Sadr wrote. “Lastly, he told me my refusal of their offer would
result in my elimination.”

Bani-Sadr said he
resisted the threats and sought an immediate release of the American
hostages, but it was clear to him that the wily Khomeini was playing
both sides of the U.S. political street.

This secret Republican plan to block release
of the hostages until after the U.S. elections remained a point of
tension between Bani-Sadr and Khomeini, according to Bani-Sadr’s letter.
Bani-Sadr said his trump card was a threat to tell the Iranian people
about the secret deal that the Khomeini forces had struck with the
Republicans.

“On Sept. 8, 1980, I invited the people of
Teheran to gather in Martyrs Square so that I can tell them the truth,”
Bani-Sadr wrote. “Khomeini insisted that I must not do so at this time.
... Two days later, again, I decided to expose everything. Ahmad
Khomeini [the ayatollah’s son] came to see me and told me, ‘Imam
[Khomeini] absolutely promises’” to reopen talks with Carter if
Bani-Sadr would relent and not go public.

Bani-Sadr said the dispute led Khomeini to
pass on a new hostage proposal to the U.S. government through his
son-in-law, Sadegh Tabatabai. Though Tabatabai did deliver a new peace
plan to U.S. officials in West Germany, the initiative unraveled when
Iraq’s Saddam Hussein invaded Iran in mid-September 1980.

Meanwhile, high-level contacts between
Republicans and Khomeini representatives allegedly continued, often
using Israeli and European intelligence operatives as the
intermediaries. On the outs with Khomeini, Bani-Sadr saw his political
position deteriorate and he was soon forced to flee into exile.

Bani-Sadr’s detailed
account meshed with previous statements made by two other senior Iranian
officials, former Defense Minister Ahmad Madani and the former acting
Foreign Minister Sadegh Ghotbzadeh.

Madani had lost to
Bani-Sadr in the 1980 presidential race despite covert CIA assistance
funneled to his campaign through Cyrus Hashemi. Madani also discovered
that Hashemi was double-dealing with the Republicans.

In an interview with PBS
Frontline in the early 1990s, Madani said Hashemi brought up the name of
Reagan’s campaign chief William Casey in connection with these
back-channel negotiations over the U.S. hostages. Madani said Hashemi
had urged Madani to meet with Casey, earning a rebuke from Madani that
“we are not here to play politics.”

Ghotbzadeh made his comments about the
Republican interference contemporaneously to the events, telling Agence
France Press on Sept. 6, 1980, that he had information that Reagan was
“trying to block a solution” to the hostage impasse. (Ghotbzadeh was
later executed by Iranian hardliners.)

Despite Bani-Sadr’s
claims of first-hand knowledge and these corroborating statements by two
other senior Iranian officials, the House Task Force dismissed
Bani-Sadr’s account as “hearsay” that lacked probative value.

French
Account

Soon, however, there was
more evidence to explain away. On Dec. 18, 1992, a day after Bani-Sadr’s
letter, David Andelman, the biographer of French intelligence chief
Alexandre deMarenches, gave sworn testimony to the Task Force about the
Republican-Iranian contacts.

Andelman, an ex-New York
Timesand CBS News correspondent, said that while he ghost-wrote
deMarenches’s
biography, the arch-conservative spymaster admitted arranging meetings
between Republicans and Iranians about the hostage issue in the summer
and fall of 1980, with one meeting held in Paris in October.

Andelman said deMarenches
ordered that the secret meetings be kept out of his memoirs because the
story could otherwise damage the reputation of his friends, William
Casey and George H.W. Bush. At the time of Andelman’s work on the book,
Bush was running for re-election as President of the United States.

Andelman’s testimony
corroborated longstanding claims from a variety of international
intelligence operatives about a Paris meeting involving Casey and Bush.
But the Task Force brushed this testimony aside, too, paradoxically
terming it “credible” but then claiming it was “insufficiently
probative.”

The Task Force’s
reasoning went that Andelman could not “rule out the possibility that
deMarenches had told him he was aware of and involved in the Casey
meetings because he, deMarenches, could not risk telling his biographer
he had no knowledge of these allegations.”

Maclean, the son of
author Norman Maclean who wrote A River Runs Through It, said a
well-placed Republican source told him in mid-October 1980 about Bush’s
secret trip to Paris to meet with Iranians on the U.S. hostage issue.

Maclean passed on that
information to David Henderson, a State Department Foreign Service
officer. Henderson recalled the date as Oct. 18, 1980, when the two met
at Henderson’s Washington home to discuss another matter, the Carter
administration’s handling of Cuban refugees who had been arriving in the
Mariel boat lift.

For his part, Maclean
never wrote about the Bush-to-Paris leak because, he told me later, a
Reagan-Bush campaign spokesman subsequently denied it. As the years
passed, the memory of the leak faded for both Henderson and Maclean,
until the October Surprise allegations bubbled to the surface again in
the early 1990s.

Henderson mentioned the
meeting in a 1991 letter to a U.S. senator that was forwarded to me
while I was working for PBS Frontline. In the letter, Henderson recalled
the conversation about Bush’s trip to Paris but not the name of the
reporter.

A Frontline producer
searched some newspaper archives to find a story about Henderson and the
Mariel boat lift as a way to identify Maclean as the journalist who had
interviewed Henderson.

Though not eager to
become part of the October Surprise story in 1991, Maclean confirmed
that he had received the Republican leak. He also agreed with
Henderson’s recollection that their conversation occurred on or about
Oct. 18, 1980. But Maclean still declined to identify his source.

The significance of the
Maclean-Henderson conversation was that it was a piece of information
locked in a kind of historical amber, untainted by subsequent claims by
intelligence operatives whose credibility had been challenged.

One could not accuse
Maclean of concocting the Bush-to-Paris allegation for some ulterior
motive, since he hadn’t used it in 1980, nor had he volunteered it a
decade later. He only confirmed it when approached by Frontline and even
then wasn’t particularly eager to talk about it.

State of Denial

Despite the mounting
evidence that the Republicans indeed had made secret contacts with
Iranian radicals in 1980, the House Task Force kept refusing to rethink
its conclusions or to extend its investigation.

For its debunking, the
Task Force relied on supposed alibis for Casey and Bush, but the
investigators knew how shaky and uncorroborated those alibis were.

Meanwhile, the
incriminating evidence kept on coming.

On Dec. 21, 1992, former
CIA officer Charles Cogan recounted a remark in early 1981 from banker
David Rockefeller’s aide Joseph Reed to then-CIA Director William Casey
about their success in blocking Carter’s “October Surprise.”

Reed had been
Rockefeller’s point man in helping the Shah of Iran after his 1979
ouster, which led the Khomeini regime to seek the withdrawal of billions
of dollars from the Shah’s accounts at Rockefeller’s Chase Manhattan
Bank.

Ironically, the Iranian
hostage crisis worked to the bank’s advantage because the U.S.
government – as retaliation for the hostage-taking – froze those
accounts. If the crisis were resolved quickly and the money suddenly
unfrozen, Chase Manhattan’s financial viability would be put in doubt.

After Reagan and Bush
took office – and the Chase accounts remained frozen – Reed was
appointed ambassador to Morocco, which led him to visit Casey at CIA
headquarters, as Cogan lingered at the door to Casey’s office.

“Joseph Reed said, ‘we’
and then the verb [and then] something about Carter’s October Surprise,”
Cogan testified in a “secret” deposition. “The implication was we did
something about Carter’s October Surprise.”

Task Force investigators
understood the full quote to have been, “We fucked Carter’s October
Surprise,” a claim that was at the heart of what the Task Force was
assigned to investigate. But the Task Force left Cogan’s recollection
out of its report altogether.

The pattern of the Task
Force’s selective judgments began to grate on some of the Democratic
congressmen assigned to the investigation.

Though the October
Surprise allegations supposedly were a myth, the information developed
by the Task Force staff was kept under tight security. Congressmen were
only allowed to review the evidence in a secure room under guard.

The restrictions meant
that many members were forced to rely on the Task Force staff that had
been assembled largely by excluding anyone who thought the allegations
might actually be true.

On Jan. 3, 1993,
Congressman Mervyn Dymally, a California Democrat and Task Force member,
submitted a dissent to the impending Task Force debunking of the October
Surprise allegations. Dymally’s dissent complained about selective
handling of evidence to clear the Reagan-Bush campaign.

Dymally, who was retiring
from Congress, cited the investigation’s reliance on shaky
circumstantial data for exonerating the Republicans and the uncritical
acceptance of accounts from Casey’s associates.

In reviewing the Task
Force report, Dymally’s
staff aide, Marwan Burgan, quickly spotted some of the report’s
absurd alibis, including the claim that because someone wrote down
Casey’s home phone number on one day that proved Casey was home, or that
because a plane flew from San Francisco directly to London on another
important date that Casey must have been onboard.

Sources who saw Dymally’s dissent said it argued that “just because
phones ring and planes fly doesn’t mean that someone is there to answer
the phone or is on the plane.” But Dymally’s reasonable observations
were fiercely opposed by Barcella, who enlisted Task Force chairman, Lee
Hamilton, to pressure Dymally into withdrawing the dissent.

Dymally told me that the
day his dissent was submitted, he received a call from Hamilton warning
him that if the dissent was not withdrawn, “I will have to come down
hard on you.”

The next day, Hamilton,
who was becoming chairman of the House International Affairs Committee,
fired the staff of the Africa subcommittee that Dymally had headed. The
firings were billed as routine, and Hamilton told me that “the two
things came along at the same time, but they were not connected in my
mind.”

Hamilton said his warning
to Dymally referred to a toughly worded response that Hamilton would
have fired off at Dymally if the dissent had stood. However, hoping to
salvage the jobs of some of his staff, Dymally agreed to withdraw the
dissent.

Russian Complication

So the House Task Force’s
report was shipped off to the printers with its conclusion that there
was “no credible evidence” of Republican double-dealing with Iran over
the 52 U.S. hostages in 1980.

The report was scheduled
for release on Jan. 13, 1993, just one week before George H.W. Bush’s
Presidency officially would come to an end. But there was still one more
surprise for the October Surprise Task Force.

On Jan. 11, 1993,
Hamilton received a response to a query he had sent to the Russian
government on Oct. 21, 1992,
requesting any information that Moscow might have about the October
Surprise case.

The Russian response came
from Sergey V. Stepashin, chairman of the Supreme Soviet’s Committee on
Defense and Security Issues, a job roughly equivalent to chairman of the
Senate Intelligence Committee.

In what might have been
an unprecedented act of cooperation between the two longtime enemies,
Stepashin provided a summary of what Russian intelligence files showed
about the October Surprise charges and other secret U.S. dealings with
Iran.

In the 1980s, after all,
the Soviet KGB was not without its own sources on a topic as important
to Moscow as developments in neighboring Iran. The KGB had penetrated or
maintained close relations with many of the intelligence services linked
to the October Surprise allegations, including those of France, Spain,
Germany, Iran and Israel.

History had shown, too,
that the KGB had spies inside the CIA and other U.S. intelligence
agencies. So, Soviet intelligence certainly was in a position to know a
great deal about what had or had not happened in 1980.

The Supreme Soviet’s
response was delivered to the U.S. Embassy in Moscow by Nikolay
Kuznetsov, secretary of the subcommittee on state security. Kuznetsov
apologized for the “lengthy preparation of the response.” It was quickly
translated by the U.S. embassy and forwarded to Hamilton.

To the shock of the Task Force, the six-page
Russian report stated, as fact, that Casey, Bush, CIA officials and
other Republicans had met secretly with Iranian officials in Europe
during the 1980 presidential campaign.

The Russians depicted the hostage negotiations
that year as a two-way competition between the Carter White House and
the Reagan-Bush campaign to outbid one another for Iran’s cooperation on
the hostages.

The Russians asserted that the Reagan-Bush
team indeed had disrupted Carter’s hostage negotiations, the exact
opposite of the Task Force’s conclusion.

As described by the Russians, the Carter administration offered the
Iranians supplies of arms and unfreezing of assets for a pre-election
release of the hostages. One important meeting occurred in Athens in
July 1980 with Pentagon representatives agreeing “in principle” to
deliver “a significant quantity of spare parts for F-4 and F-5 aircraft
and also M-60 tanks ... via Turkey,” the Russian report said.

The Iranians “discussed a possible
step-by-step normalization of Iranian-American relations [and] the
provision of support for President Carter in the election campaign via
the release of American hostages.”

But the Republicans were making their own overtures to the Iranians,
also in Europe, the Russian report said. “William Casey, in 1980, met
three times with representatives of the Iranian leadership,” the report
said. “The meetings took place in Madrid and Paris.”

At the Paris meeting in October 1980, “R[obert] Gates, at that time a
staffer of the National Security Council in the administration of Jimmy
Carter and former CIA Director George Bush also took part,” the Russian
report said. “In Madrid and Paris, the representatives of Ronald Reagan
and the Iranian leadership discussed the question of possibly delaying
the release of 52 hostages from the staff of the U.S. Embassy in
Teheran.”

Both the Reagan-Bush Republicans and the Carter Democrats “started from
the proposition that Imam Khomeini, having announced a policy of
‘neither the West nor the East,’ and cursing the ‘American devil,’
imperialism and Zionism, was forced to acquire American weapons, spares
and military supplies by any and all possible means,” the Russian report
said. The Republicans just won the bidding war.

”After the victory of R. Reagan in the election, in early 1981, a secret
agreement was reached in London in accord with which Iran released the
American hostages, and the U.S. continued to supply arms, spares and
military supplies for the Iranian army,” the Russian report continued.

The deliveries were carried out by Israel,
often through private arms dealers, the Russian report said. Spares for
F-14 fighters and other military equipment went to Iran from Israel in
March-April 1981 and the arms pipeline kept flowing into the mid-1980s.

”Through the Israeli conduit, Iran in 1983 bought surface-to-surface
missiles of the ‘Lance’ class plus artillery of a total value of $135
million,” the Russian report said. “In July 1983, a group of specialists
from the firm, Lockheed, went to Iran on English passports to repair the
navigation systems and other electronic components on American-produced
planes.”

In 1985, the weapons tap opened wider, into
the Iran-Contra shipments.

The matter-of-fact
Russian report was stunning. It also matched other information the Task
Force had. The Task Force had discovered that the Israelis, for example,
had shipped U.S. military spares to Iran in 1981, with the secret
acquiescence of senior Reagan-Bush administration officials.

After receiving the Russian report, a U.S. Embassy political officer
went back to the Russians seeking more details. But the Russians would
state only that the data came from the Committee on Defense and Security
Issues.

The embassy political
officer then speculated that Moscow’s report might have been “based
largely on material that has previously appeared in the Western media.”
But there was no serious follow-up by the House Task Force or the U.S.
government – even though Moscow, the communist enemy in the 1980s,
claimed to possess incriminating evidence about two CIA directors (Casey
and Gates) and two U.S. Presidents (Reagan and Bush).

Though the Russian claims
about Carter’s negotiations with Iran might cause embarrassment for
Democrats, Carter, as President, possessed the constitutional authority
to negotiate with a foreign power. The Republicans did not.

Hamilton's Quandary

The Task Force faced its
own quandary about what to do with the explosive Russian report, which –
if accurate – made the Task Force report, which was then at the
printers, not worth the paper it was being printed on.

Reputations, including
Hamilton’s, could have been severely damaged. During his days as House
Intelligence Committee chairman in the mid-1980s, Hamilton had come
under criticism for dismissing early evidence about Oliver North’s
secret contra-supply operations and getting blindsided by the covert
military shipments to Iran in 1985-86.

When the Iran-Contra
scandal finally broke in late 1986, Hamilton was named chairman of the
investigative committee and quickly bought into White House cover
stories that were later shattered by Iran-Contra special prosecutor
Lawrence Walsh.

If Hamilton had to
renounce his own October Surprise report, he might have been left with a
tattered reputation as the Republicans’ favorite chump. He might not
have built a glittering post-congressional career as a well-regarded
senior statesman invited to sit on important panels like the 9/11
Commission and now a task force with former Secretary of State James
Baker to recommend future strategy in the Iraq War.

So, in January 1993, the
decision was made to bury the Russian report.

“We got the stuff from
the Russians just a few days before” the Task Force’s own report was set
for release, Barcella told me in an interview in 2004. “We weren’t going
to be able to look into it, whether it was new information,
disinformation or whatever it was.”

When I asked him why the
Task Force didn’t just release the Russian report along with the Task
Force report, Barcella responded that the Russian report was classified,
precluding its disclosure to the public. There was no interest in
pressing for its declassification, though Hamilton would have been in a
strong position to do so.

So the extraordinary
Russian report was simply boxed up and filed away with other unpublished
information that the Task Force had collected in its year-long
investigation. Barcella said he envisioned the Task Force material
ending up in some vast warehouse, “like in the movie ‘Raiders of the
Lost Ark.’”

Actually, the Russian
report found an even less elegant resting place. In late 1994, I
discovered the documents, including the Russian report, in boxes that
had been piled up in a former Ladies Room in an obscure office off the
Rayburn House Office Building’s parking garage.

Robert Parry broke many of the Iran-Contra
stories in the 1980s for the Associated Press and Newsweek. His latest book, Secrecy & Privilege: Rise of the Bush Dynasty from
Watergate to Iraq, can be ordered at
secrecyandprivilege.com. It's also available at
Amazon.com, as is his 1999 book, Lost History: Contras, Cocaine,
the Press & 'Project Truth.'

Consortiumnews.com
is a product of The Consortium for Independent Journalism, Inc., a non-profit organization
that relies on donations from its readers to produce these stories and keep alive this Web
publication. To contribute,click here.To contact CIJ, click here